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Oil Steadies Near 2014 High as Investors Assess Energy Crisis - BLOOMBERG

OCTOBER 19, 2021

(Bloomberg) -- Oil steadied near the highest level since 2014 in Asian trading as investors assessed the energy crunch roiling global markets.

Futures in New York traded above $82 a barrel after rising 2.5% over the past three sessions. Russia is opting against sending more natural gas to Europe, while OPEC+ is failing to pump enough crude to meet its production target, exacerbating a supply crunch in energy markets. One technical indicator, however, is signaling crude is overbought and due for a correction.

“It looks like the oil market is in a state of flux and trying to reconcile speculation with reality,” said Howie Lee, an economist at Oversea-Chinese Banking Corp. in Singapore. While oil product stockpiles are tight, they are not at a level where we should be expecting $100 oil, he added.

Crude has rallied over the past eight weeks as the energy crisis -- prompted by natural gas and coal shortages -- coincided with a rebound in demand from key economies emerging from the pandemic. The crunch is making winners out of oil refiners in Asia following a rush to secure alternative fuel supplies, lifting industry margins in a revival that’ll stretch into next year.

Gazprom PJSC’s gas exports to its main markets fell in the first two weeks of October to the lowest since at least 2014 for the time of year, as domestic demand absorbed most output gains. Auctions for pipeline capacity next month gave no indication that Russia is planning to increase shipments to Europe, even after President Vladimir Putin said he was prepared to boost supplies.

See also: Mercuria’s Dunand Says $100 Oil Is Possible This Winter

OPEC+ cut its production 15% deeper than planned in September, compared with 16% in August and 9% in July, according to delegates with knowledge of the matter. This reflects the inability of some members -- including Nigeria, Angola and Azerbaijan -- to raise output to agreed volumes due to a lack of investment, exploration and other issues.


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